Neiman Marcus 2007 Annual Report Download - page 112

Table of Contents
The Senior Subordinated Notes are fully and unconditionally guaranteed, on a joint and several unsecured, senior
subordinated basis, by each of NMG's wholly-owned domestic subsidiaries that guarantee NMG's obligations under its Senior Secured
Credit Facilities and by the Company. The Senior Subordinated Notes and the guarantees thereof are NMG's and the guarantors'
unsecured, senior subordinated obligations and rank (i) junior to all of NMG's and the guarantors' existing and future senior
indebtedness, including the Senior Notes and any borrowings under NMG's Senior Secured Credit Facilities, and the guarantees
thereof and NMG's 2028 Debentures; (ii) equally with any of NMG's and the guarantors' future senior subordinated indebtedness; and
(iii) senior to any of NMG's and the guarantors' future subordinated indebtedness. In addition, the Senior Subordinated Notes are
structurally subordinated to all existing and future liabilities, including trade payables, of NMG's subsidiaries that are not providing
guarantees.
NMG is not required to make any mandatory redemption or sinking fund payments with respect to the Senior Subordinated
Notes, but, under certain circumstances, NMG may be required to offer to purchase Senior Subordinated Notes as described below.
The Company may from time to time acquire Senior Subordinated Notes by means other than a redemption, whether by tender offer,
in open market purchases, through negotiated transactions or otherwise, in accordance with applicable securities laws.
Except as described below, the Senior Subordinated Notes are not redeemable at NMG's option prior to October 15, 2010.
From and after October 15, 2010, NMG may redeem the Senior Subordinated Notes, in whole or in part, at a redemption price equal to
105.188% of principal amount, declining annually to 100% of principal amount on October 15, 2013, plus accrued and unpaid interest,
and Additional Interest (as defined in the Senior Subordinated Indenture), if any, thereon to the applicable redemption date.
Prior to October 15, 2008, NMG may, at its option, subject to certain conditions, redeem up to 35% of the original aggregate
principal amount of Senior Subordinated Notes at a redemption price equal to 110.375% of the aggregate principal amount thereof,
plus accrued and unpaid interest, and Additional Interest, if any, thereon to the redemption date, with the net cash proceeds of one or
more equity offerings of NMG or any direct or indirect parent of NMG to the extent such net proceeds are contributed to NMG.
At any time prior to October 15, 2010, NMG also may redeem all or a part of the Senior Subordinated Notes at a redemption
price equal to 100% of the principal amount of Senior Subordinated Notes redeemed plus an applicable premium, as provided in the
Senior Subordinated Indenture, and accrued and unpaid interest and Additional Interest, if any, to the redemption date.
Upon the occurrence of a change of control (as defined in the Senior Subordinated Indenture), NMG will make an offer to
purchase all of the Senior Subordinated Notes at a price in cash equal to 101% of the aggregate principal amount thereof plus accrued
and unpaid interest, and Additional Interest, if any, to the date of purchase.
The indenture governing the Senior Subordinated Notes contains covenants substantially similar to those applicable to
NMG's Senior Notes described above. The Senior Subordinated Indenture also provides for events of default, which, if any of them
occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all outstanding Senior
Notes to be due and payable immediately, subject to certain exceptions.
The fair value of NMG's Senior Subordinated Notes at August 2, 2008 was approximately $490.0 million.
Redemption of 2008 Notes. In May 1998, NMG issued $125.0 million aggregate principal amount of its 2008 Notes. Upon
closing of the Acquisition, NMG called its 2008 Notes for redemption pursuant to their terms. On November 7, 2005, NMG used
$134.7 million of reserved cash to redeem its 2008 Notes, which included a call premium of $6.2 million plus accrued interest of
$3.5 million through the redemption date.
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